Pelosi Navigates Rough Reform Waters

Speaker Nancy Pelosi (D-Calif.) is tacking left as she tries to put the finishing touches on a House health care overhaul, pushing for the bill to include two provisions reviled by many moderates: a tax on the wealthy to help pay for it and a public insurance option pegged to Medicare reimbursement rates.

Pelosi’s gambit runs the risk of inflaming Democratic moderates, who have tried to nudge the package to the political center in anticipation of a final bill that hews closely to what the Senate Finance Committee produces. They are anxious to avoid taking career-threatening votes on a House package only to see it rewritten in conference negotiations with the Senate.

But the Democratic moderates’ negotiating position has been weakened by their inability to coalesce around a concrete set of demands. The 52-member Blue Dog Coalition, for example, includes a bloc supportive of a public insurance option, though many in the Blue Dog ranks have called it a deal-breaker. And many others in that group are divided by disparate top-line concerns, ranging from cost-cutting mechanisms to delivery system reforms.

Pelosi laid out her preferences in a leadership meeting at the end of last week, three sources familiar with that session said. The Speaker has avoided laying out firm deadlines, saying during a health care-related event in Philadelphia on Monday that she wants reform to pass “within weeks.— But several leadership aides said she is aiming to wrap up work on the bill this week so it can be scored by the Congressional Budget Office in time for a mid-October vote.

The timeline leaves little opportunity for moderates to make their case. And it sets up a classic tug-of-war between Pelosi, who keeps faith with the liberals in her Caucus, and her majority-makers, moderates precariously situated in swing or Republican-leaning districts. “The moderates are in a difficult position because their constituents are not where the House bill is headed, and they are potentially taking votes on things that are never going to see the light of day,— one senior Democratic aide said.

Pelosi spokesman Nadeam Elshami said that while the Speaker has made clear that the public insurance option will be in the bill, beyond that no decisions have been made. “It is inaccurate for anyone to assert that the Speaker or the leadership has determined the form of the public option,— Elshami said, noting that the Caucus will huddle Thursday to discuss the matter.

If Pelosi follows through, she would effectively eviscerate the deal that Blue Dogs on the Energy and Commerce Committee reached with Chairman Henry Waxman (D-Calif.) in July to break a logjam on that panel. Watering down the public insurance option added to the overall cost of the bill and immediately came under fire from the Congressional Progressive Caucus, whose members vowed to vote down any bill that did not include a public option tied to Medicare rates. But for Blue Dogs such as Rep. Earl Pomeroy (D-N.D.), who complains that Medicare payments are insufficient and unfair, the modification was enough to win their support for the package.

Pelosi’s hand could be strengthened by the fact that Rep. Mike Ross (D-Ark.), a leading Blue Dog and chief architect of the Energy and Commerce compromise, walked away from the deal when he returned from the August recess, promising to vote against any bill that included a public insurance option.

The question for Pelosi, the best vote-counter in the Caucus, is how many Blue Dogs will bolt, and whether it is worth both the liberal votes gained and the cost savings. “We don’t know how many people we’re going to lose,— one senior Democratic aide said. “But what we gain is a lot of money— — an important advantage, considering the House has to trim the cost of its measure by more than $100 billion to bring it in line with the preferred White House price tag of $900 billion.

Pelosi’s charge on the surtax is potentially as decisive — and divisive. Including the levy is sure to please liberals and her committee chairmen, including Ways and Means Chairman Charlie Rangel (D-N.Y.), who has defended his proposal for a tax on the rich even though President Barack Obama declined to mention it in his address to Congress. But a sizable number of Democrats, led by freshman Reps. Jared Polis (Colo.) and Gerry Connolly (Va.), have tried to kill or roll back that surcharge. Sophomore Rep. Jason Altmire (D-Pa.) added to the pushback on Tuesday, sending Pelosi and House Majority Leader Steny Hoyer (D-Md.) a letter signed by 31 other Democrats urging that lawmakers instead fund reform from savings within the health care system.

Altmire, a prominent member of the business-friendly New Democrat Coalition, said he mulled the surtax issue over the August recess, but word from the leadership meeting last week that Pelosi intended to go forward with the approach was “the last straw.— He called the proposal “bad policy— and said he would vote against any package that includes it.

Of the Speaker’s approach, he said, “She’s setting the bar as high as possible so she can go into conference and negotiate downward from there.—